Texas RECs (renewable energy credits) can be sold to utilities which cannot themselves meet a state RPS (renewable portfolio standard). The Texas market price of the RECs is currently very low – less than $1 / MWh. Texas has a nonbinding RPS goal of 10GW of renewable capacity by 2025, but ERCOT already has 19GW of connected wind power! Thus wind is now installed purely for economic reasons (including the Federal PTC incentive) and the RPS target is no longer driving wind capacity increases, so there are plenty of REC certificates for sale and the price is thus very low.

The estimate of the current unsubsidised wind price for Texas is thus $36 / MWh, excluding transmission costs. The CREZ transmission network costs required to support wind and solar power are a separate item in the cost model spreadsheet.

An alternative calculation uses the April 2017 US EIA (Energy Information Administration) LCOE document. The 2019 minimum regional figure (assumed to represent Texas and other interior states) before any subsidy is $40.4 / MWh from table A2, including $2.7 (weighted average) for transmission from table A1a. Subtracting the transmission gives $37.7 / MWh, very close to the $36 figure without transmission derived above.

Wind – 2030-40 high Texas LCOE estimate (unsubsidised) – $31.3 / MWh

The IRENA (International Renewable Energy Agency) report “The Power to Change: Solar and Wind Cost Reduction Potential to 2025” points to a reduction of 26% in the LCOE cost of wind power by 2025, from a combination of cost reductions per MW and increased capacity factors (to over 50%) from technical improvements such as increased hub heights and larger rotors. Thus by 2030, on a very conservative basis it is likely that maximum Texas LCOE prices will reduce by at least13% (i.e. at least half of the figure of 26%). A 13% reduction from $36 / MWH gives $31.3 / MWh high LCOE cost.

There has already been a bid of $30 / MWh for unsubsidised wind power in Morocco. It is not straightforward to relate this to future costs in Texas. The hub, generator and rotor costs should reduce significantly by the 2030s. Wind speeds appear to be similar, with good areas averaging 8-9.5 m/s in both regions. The cost of capital makes a big difference and is unknown. Labour will be cheaper in Morocco. Nevertheless this recent Morocco bid is taken as confirmation that the 2030s Texas high cost estimate is in the right ball park.

Wind – 2030-40 low Texas LCOE estimate (unsubsidised) – $19.1 / MWh

For the low LCOE cost the 2016 BNEF (Bloomberg New Energy Finance) Finance Summit slide 5 figure of 19% learning reduction per doubling of installed global capacity is used with an assumption that global installed wind power increases by a factor of 8 (3 doublings), for a possible reduction to $19.1 / MWh by the 2030s.